Gold does its thing

04/22/25
  • Gold hits new record, tops $3,400 for the first time
  • Prices up  more than 30% for the year vs. 12% loss for S&P 500
  • Extreme market conditions could undermine momentum

While gold regularly pops up in conversations about its role as an inflation hedge, history suggests its performance in that capacity is uneven.

By contrast, the yellow metal has a much more reliable track record of doing what we’ve seen it do lately: function as a “safe-haven” trade during times of market stress and uncertainty.

As of Monday, gold had rallied 31.4% this year, while the S&P 500 (SPX) had fallen 12.3%. And just since April 8, gold prices have jumped more than 14%, their biggest eight-trading-day gain since 2008:

Chart 1: June gold futures (GCM5) and S&P 500 (SPX), 4/8/25–4/21/25.

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation. Note: It is not possible to invest directly in an index.)


On Monday, gold rallied more than 3% for the second time in the past three trading days, closing above $3,400 for the first time.

In short, the stock market’s loss has been gold’s gain. While that would imply a bullish reversal of fortune for equities could undermine gold’s momentum, Morgan Stanley & Co. analysts recently argued the rally could extend—at least modestly—despite the recent rush of record highs.

The strategists think a combination of strong physical demand for gold (both from central banks and ETFs), a falling US dollar (which makes all dollar-denominated commodities cheaper for non-dollar holders), possible “stagflation,” and continued safe-haven demand could continue to support bullish momentum.1

But in addition to their expectations for gold to potentially rally to around $3,500 by Q3—a target that got much closer in just the past three days—the analysts also point out that, during times of extreme market stress, gold can fall along with other assets because it can be a source of liquidity—i.e., traders and investors sell their gold to get cash. A great example was at the beginning of the COVID crisis, when gold tumbled along with the stock market in March 2020 before rallying to new highs later in the year.

Market Mover Update: While gold appeared to be doing its job on a stressful day for stocks, another safe-haven asset wasn’t: The benchmark 10-year T-note, which usually attracts “flight-to-quality” buying during sharp stock-market sell-offs, lost ground on Monday, as did the US dollar.

Although they certainly weren’t alone in losing ground yesterday, both USA Rare Earth (USAR) and MP Materials (MP) sold off sharply on Monday (see “Rare move in the materials sector”).

After stabilizing last week, June WTI crude oil futures (CLM5) started this one by tumbling more than 2%, falling below $63 (see “Slippery oil picture”).

Today’s earnings include: Quest Diagnostics (DGX), Danaher (DHR), GE Aerospace (GE), Halliburton (HAL), Kimberly-Clark (KMB), Lockheed Martin (LMT), 3M (MMM), Northrop Grumman (NOC), Verizon (VZ), Baker Hughes (BKR), Enphase Energy (ENPH), Tesla (TSLA)

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1 MorganStanley.com. Gold Rush Picks Up Speed. 4/21/25.

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